T-Mobile US Inc TMUS.N is buying wireless airwave licenses from Verizon Wireless to improve its high-speed network in a $3.3 billion deal and said it hopes to follow up with more spectrum purchases.

Shares in T-Mobile, majority owned by Deutsche Telekom (DTEGn.DE), rose 2.5 percent on Monday after the company said it will pay Verizon Wireless $2.365 billion cash and give it $950 million worth of spectrum.

Demand for wireless airwaves has risen sharply as U.S. operators scramble to boost their networks to support increasing consumer Web surfing and video use on cellphones. While the government is planning airwave auctions, spectrum demand may also drive further consolidation involving airwave owners such as Satellite TV provider Dish Network (DISH.O).

T-Mobile, the No. 4 U.S. mobile provider, has been using discounts to compete with bigger rivals, but it badly needs more airwaves after falling behind bigger rivals AT&T Inc (T.N) and Verizon Wireless in developing high-speed data services.

T-Mobile, which may itself be an acquisition target of Dish or Sprint Corp (S.N), also said on Monday that it hopes to buy additional spectrum in government auctions at the end of 2014 and in 2015.

"It's still a priority to get additional spectrum," Chief Technology Officer Neville Ray told analysts on a conference call to discuss the deal.

While they said the spectrum was crucial for T-Mobile US, some analysts noted that the price was steep at a 26 percent premium over what Verizon had paid for it at an auction several years ago.

Wells Fargo analyst Jennifer Fritzsche said the deal was "very much not a fire sale" for Verizon. She noted that it would be an important boost to T-Mobile's network, but said the buyer may have to pay another $1 billion to put the spectrum to use.

T-Mobile raised $3.8 billion in stock and bond sales in November to fund spectrum purchases. Chief Financial Officer Braxton Carter said he would look to debt markets rather than equity markets for any future spectrum funding needs.

The company will be able to use the additional airwaves to help it steal customers from rivals such as AT&T, Pacific Crest analyst Michael Bowen said.

"T-Mobile will now have greater spectrum with which to compete against all carriers, but we anticipate that AT&T will continue to suffer the largest impact," Bowen said.

In a sign of rising competitive tensions between the two companies, which use the same network technology, AT&T on Friday offered T-Mobile customers a $200 credit to switch to its service.

T-Mobile said it could offer services as soon as the fourth quarter using the new spectrum licenses, which cover more than 150 million people in nine of the top 10 U.S. markets and 21 of the top 30 markets including New York, Atlanta and Los Angeles.

It said the purchase, which requires regulatory approval, is expected to close around mid-2014.

T-Mobile also said the companies will realign spectrum blocks in markets such as northern California and Atlanta.

Verizon Wireless had said late last year it would again consider selling unused A Block airwaves in the 700 megahertz frequency band that T-Mobile has now agreed to buy.

TAP Advisors was the financial adviser for T-Mobile.

T-Mobile rose 89 cents to $33.17 on the New York Stock Exchange after the news. Verizon shares edged up 3 cents to $48.45. Sprint fell 27 cents, or almost 3 percent, to $9.67, while AT&T was up 12 cents at $34.92.

Reuters reported November 19 that T-Mobile was seeking to buy spectrum from Verizon Wireless, owned by Verizon Communications Inc (VZ.N) and Vodafone Group Plc (VOD.L).

(Reporting by Neha Alawadhi in Bangalore and Sinead Carew in New York; Editing by Savio D'Souza, Jeffrey Benkoe and Richard Chang)

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